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Vodafone Group Public Limited Company Message Board

  • believerinbalancesheettrends believerinbalancesheettrends Apr 25, 2013 7:59 AM Flag

    Total Debt (mrq): 57.09B

    Total Debt (mrq): 57.09B - 100B from VZ = 43B cash position in VOD with no debt after this transaction?
    Likely result: Special Dividend?

    Sentiment: Strong Buy

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    • Much better than VZ will be after they buy this. VZ debt is very high right now plus they have tremendous pension liabilties.

    • If the deal goes through, a big special dividend is possible, but VOD will want to replace the large and growing cash flow that VZW provides. Afterall, VZW is VOD's gem. The key risk is that VOD buys EU assets that have a return far lower than VZW. VOD has talked about buying lower margin low growth EU wireline assets recently. I'd rather see VOD hold VZW and its big and growing cash flow.

      After taxes, this deal may reduce cash flow and value. Plus, if half the deal is paid in rich VZ stock, who knows what that will be worth in the future and how long it will take VOD to sell it. And don't forget, shareholders have to pay taxes on dividends, further reducing the after-tax return.

      • 1 Reply to betting_my_bundle
      • April 25, 2013, 11:55 A.M. ET.
        Verizon’s Rumored VOD Buyout: Price Needs to Be Much Higher, Says Jefferies

        By Tiernan Ray
        Jefferies & Co.’s Jerry Dellis this morning reflects on a Reuters report this morning that Verizon Communications (VZ) is contemplating a $100 billion buyout of Vodafone‘s (VOD) stake in the Verizon Wireless joint venture, and that Verizon may discuss the matter at a board meeting next week.

        Dellis is skeptical, noting that with Verizon Wireless, Vodafone enjoys 3% profit growth from this year through 2016, but without the stake, Vodafone would be faxing a 7% profit decline.

        Dellis, who has a Hold rating on Vodafone, thinks that the bid from Verizon would have to be substantially higher to budge Vodafone:

        The glaring issue raised by last night’s article is of course price. $100bn (6.4x EV/EBITDA Mar14e) is nowhere close to the level at which VOD can consider a deal, even assuming a minimal CGT charge. The Sunday Times article on 24 March floated a valuation for the VZW stake of $135bn (and this before estimate upgrades that followed last week’s VZ 1Q’s). The suggestion in last night’s article that a $100bn bid might soon be tabled, suggests discussions are really at a very preliminary stage, In our SoP, we value the 45% VZW stake at $121bn (7.7x EV/EBITDA Mar14e).

        Vodafone shares today are higher by 85 cents, or almost 3%, while Verizon shares are up $1.07, or 2%, at $52.87.

    • How would that be taxed for us investors?

38.650.00(0.00%)May 27 4:00 PMEDT